RADIUS INC. SECTION 401(K) PLAN
LOAN POLICY
AMENDED AS OF NOVEMBER 14, 1995
Terms used in this Loan Policy shall have the same meanings as in the
Radius Inc. Section 401(k) Plan (the "Plan").
1. LOAN APPLICATION. Any Member may apply for a loan from the Plan. For
purposes of this Loan Policy, the term "Member" means any participant or
beneficiary who is a party in interest (as determined under ERISA Section 3(14))
with respect to the Plan. A Member must apply for each loan in writing with an
application specifying the amount of the loan desired, the requested duration
for the loan, the purpose for the loan and the source of security for the loan.
The Committee will not approve any loan if a Member is not creditworthy.
The principal amount will be funded first from the Member's rollover
contribution account, if any, then from the vested interest in matching and
additional contributions, if any, and finally, from elective contributions. All
loans shall be withdrawn from the investment funds directed by the Member. The
Plan will credit the interest earned on the promissory note and any principal
payments paid by the Member to those investment funds in which the Member is
investing his or her accounts at the time of such deposit, or in such other
investment fund as the Committee may designate.
2. LIMITATION ON LOAN AMOUNT/PURPOSE OF LOAN. The Committee will not
approve any loan to a Member in an amount which exceeds 50% of his or her
nonforfeitable account balance, as reflected by the books and records of the
Plan immediately after the loan is made. The maximum aggregate dollar amount of
loans outstanding to any Member may not exceed $50,000 minus the excess of the
Member's highest outstanding loan balance during the one year period ending on
the date of the loan over the current outstanding loan balance on loans from the
Plan. A Member may not request a loan for less than $1,000 and all loans must be
in multiples of $100. A Member may not receive more than two loans in any Plan
Year. A Member is entitled to a loan for any purpose.
3. TERMS OF LOAN. The Committee will document every loan in the form of
a promissory note signed by the Member for (i) the face amount of the loan and
(ii) a commercially reasonable rate of interest. The Committee will determine
the appropriate interest rate by obtaining at least one quote from a financial
institution chosen by the Committee that is in the business of lending money.
The interest rate quote(s) must take into account the term of the loan, the
security on the loan, the creditworthiness of the Member, the intended use of
the loan proceeds and must reflect a commercially reasonable rate for the
geographical region in which the Member lives. If Members in the Plan live in
different geographical regions, the Committee may establish a uniform
commercially reasonable interest rate applicable to all regions based on
information obtained from at least one region in which Members live. The
Committee must reevaluate interest rates for loans made more than one month
since the last loan made by the Plan.
The interest rate for a loan of 5 years or less will be considered
reasonable by Comerica, the Plan's trustee, if it falls within the range of the
following guidelines:
(a) the prime rate of interest offered by Bank of America plus one point;
(b) the prime rate of interest as published in THE WALL STREET JOURNAL
plus one point;
(c) the interest rate offered by Bank of America for similar personal
secured loans; or
(d) the interest rate equal to the discount rate plus five points.
The range of rates applicable as a guideline for a 15-year loan (available
only for the purchase of a principal residence) will be:
(a) the rate of interest available from Bank of America for a 15-year
conventional fixed rate mortgage;
(b) a rate equal to the computed yield of the Federal Home Loan Mortgage
Corporation (FREDDIE MAC) on 15-year mortgage commitments for delivery
within 30 days for standard conventional fixed rate mortgages; or
(c) a rate equal to the computed yield of the Federal National Mortgage
Association (FANNIE MAE) on 15-year mortgage commitments for delivery
within 30 days for standard conventional fixed rate mortgages.
The Committee will determine whether the interest rate is commercially
reasonable at the time the loan request is received.
4. PAYMENT. The Committee will fix the term for repayment of any loan;
provided however, that in no instance may the term of repayment be greater than
5 years, unless the loan qualifies as a home loan. The Committee may fix the
term for repayment of a home loan for a period not to exceed 15 years. A "home
loan" is a loan used to acquire a dwelling unit which, within a reasonable time,
the participant will use as a principal residence.
The loan must provide for at least quarterly payments under a level
amortization schedule. All loans to Members shall be repaid through automatic
payroll withholding in substantially equal amounts. If a Member with a loan
outstanding terminates service with Radius, such Member may continue to make
payment on such loan in accordance with a revised repayment schedule as
described below. If the Member does not execute the necessary paperwork to
provide for such continued repayment within 30 days following such Member's date
of termination, the loan shall become immediately due and must be paid in full.
All loans will be made in compliance with Regulation Z ("Truth in Lending") and
Regulation B ("Equal Credit Opportunity").
A terminated employee who selects to continue making payments on his or her
loan rather than repay it in full will be provided with a revised payment
schedule. Upon completion of the proper paperwork, the Member will receive his
or her revised payment schedule from the Plan's trustee. It is the
responsibility of the Member to comply with his or her revised payment schedule.
The Plan's trustee and administrator will charge fees associated with the
revised payment schedule. These charges will be deducted from the Member's
account quarterly. Payments on the revised payment schedule will not be
allocated to Member's choices of fund(s) until cleared.
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5. SECURITY FOR LOAN. A Member must adequately secure each loan with an
irrevocable pledge and assignment of no greater than 50% of the Member's
nonforfeitable account balance. This pledge will form part of the promissory
note signed by the Member.
6. DEFAULT/RISK OF LOSS. A loan for which a scheduled repayment is
delinquent for more than 60 days will be reviewed by the Committee to determine
appropriate action. The Committee will treat any loan in default if:
(a) any scheduled payment remains unpaid for more than 120 days;
(b) the Member makes or furnishes any representation or statement to the
Plan with respect to his or her application which proves to have been
false or incomplete in any material respect when made or furnished;
(c) there is any loss, theft, damage, destruction, sale or encumbrance to
or of any of the collateral, or the making of any levy, seizure or
attachment of or on the collateral, including a withdrawal of the
Member's nonforfeitable account balance from the Plan;
(d) the death of the Member;
(e) the dissolution, insolvency, business failure, appointment of
receiver of any part of the property of, assignment for the benefit
of creditors by, or the commencement of any proceeding under any
bankruptcy or insolvency laws of, by or against the Member;
(f) the Member fails to comply with any term of the promissory note; and
(g) the Member's account balance under the Plan and trust become
distributable to him.
Notwithstanding any provision of this Loan Policy, if a Member with a loan
outstanding terminates service with Radius and does not execute the necessary
paperwork to provide for continued repayment or pay the outstanding balance of
such loan in full within 30 days of such Member's date of termination, the
Committee will treat the loan as in default.
The Member will have the opportunity to repay the loan and resume current
status of the loan by paying any missed payment plus interest or, if
distribution is available under the Plan, the Member may request distribution of
an amount equal to the unpaid balance due under the promissory note. If the loan
remains in default, the Committee has the option of foreclosing on any
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security it holds or, to the extent a distribution to the Member is permissible
under the Plan, offset the Member's nonforfeitable account balance by the
outstanding balance of the loan. If there are unpaid amounts remaining, it will
be offset when the Member becomes entitled to a distribution.
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